THE limit on contactless payments in shops and stores is to more than doubled to £100, Rishi Sunak will announce in his Budget today.

The change from the current £45 limit, said the Treasury, would make transactions “easier than ever” and, as part of the UK Government’s Plan for Jobs, would provide a big boost to the struggling retail sector, helping to support jobs and businesses.

Although the limit is being increased to £100, the number of consecutive transactions before consumers are required to provide their PIN remains at five. However, the cumulative transaction limit, which is how much they can spend across those five payments, will rise to £300.

The change is likely to accelerate the fall-off in the use of cash.

Last autumn, ATM data showed cash usage had nearly halved in three years. Figures from Link, which manages most of the country’s cash machines, showed in September 2017 there were some 170 million withdrawals from ATMs; last September this had fallen to just 88m.

Fears are growing about the reduction in free withdrawal cash machines.

Last week, research showed the parliamentary constituency of Glasgow North West had seen at 43% one the largest reductions across the UK in free ATMs during the past two years, from 86 to 47, while the number of pay-to-use cashpoints in the area had shot up from 11 to 34 over the same period.

The proportion of debit card payments using contactless has risen since the onset of Covid-19 from four out 10 in 2019 to six out of 10 by September 2020.

Following Brexit, the UK is no longer bound by the £45 cap on contactless payments which applies across the 27-member state bloc.

The Chancellor said: “As we begin to open the UK economy and people return to the high street, the contactless limit increase will make it easier than ever before for people to pay for their shopping, providing a welcome boost to retail that will protect jobs and drive growth across the capital.”

The increase comes after the Financial Conduct Authority held a public consultation on contactless limits and recommended the change.

In 2019, right out of ten UK adults used contactless payments and the increase in contactless limits will mean millions of payments will now be made simpler than ever before, said the Treasury.

While legally in force from today, the changes to limits will not happen in practice immediately as firms will need to make the necessary systems changes. The banking industry is due to implement the new £100 limit later this year.

Despite the huge increase in contactless payments, the Government maintains it is also committed to protecting access to cash.

In October, it set out plans to protect the UK’s future cash system and ensure people have easy access to cash, with proposals including seeing cashback offered at shops without consumers having to make a purchase.

The FCA’s publicly consultation on increasing the contactless limit took into account the potential impact on fraud. When the limits were last raised in spring 2020 from £30 to £45, there was no significant recorded increase in fraud levels, explained the Treasury.

The total value of reported fraud falling within the then increased threshold - between £30 to £45 - equated to 0.02% of the total amount spent using contactless cards since April 2020.

Data shows that after the contactless increase to £45, from April 2020 to January 2021, there were 350 million contactless transactions, which previously would have required chip and PIN.

The Treasury pointed out that the change in the legal limit put the UK at a similar level to other major economies including Australia, Canada and the US, which have recently increased their limits to around £112, £143 and £145 respectively.